GE9 (7504) – ETHICS 1ST EXAM REVIEWER

1.1 Being a Professional of Integrity:

• Ethics - consists of the standards of behavior to which we hold ourselves in our personal and
professional lives.
• Personal lives - our ethics sets norms for the ways in which we interact with family and friends.
• Professional lives - ethics guides our interactions with customers, clients, colleagues, employees, and
shareholders affected by our business practices.
• Stakeholders - individuals and entities affected by a business’s decisions, including customers,
suppliers, investors, employees, the community, and the environment.
• Patagonia - exemplifies integrity through its "1% for the Planet" initiative, donating 1 percent of sales
towards environmental conservation.
• Business ethics - governs the behavior of companies and their representatives, ensuring compliance
with the law and respect for stakeholders' rights, including customers, clients, employees, the
community, and the environment.
• Integrity - the adherence to a code of moral values implying trustworthiness and incorruptibility
because there is unity between what we say and what we do.
• Acting with integrity - means we adhere strongly to a code of ethics, so it implies trustworthiness and
incorruptibility.
• Compliance - the extent to which a company conducts its business operations in accordance with
applicable regulation and statutes.
• Legal compliance - involves following the laws and regulations established by governmental
authorities.
• Ethical compliance - goes beyond legal requirements and involves conducting business in a morally
responsible and socially acceptable manner.
• Hippocratic Oath - is a historic pledge traditionally taken by physicians, outlining ethical principles and
standards for medical practice.
• Normative ethical theories - a group of philosophical theories that describe how people ought to
behave on the basis of reason.
1. Utilitarianism - a normative theory of ethics suggesting that an ethical act is the one whose
consequences create the greatest good for the greatest number of people.
2. Deontology - a normative ethical theory suggesting that an ethical decision requires us to
observe only the rights and duties we owe to others, and, in the context of business, act on
the basis of a primary motive to do what is right by all stakeholders.
• Kantianism – human beings are creatures with reason.
3. Virtue theory - a normative theory that focuses on proper conduct guided by the training we
received growing up.
• Descriptive ethical theories - are based on scientific evidence, primarily in the field of psychology, and
describe how people tend to behave within a particular context.
1.2 Ethics and Profitability

• Short-term perspective - a focus on the goal of maximizing periodic (i.e., quarterly and annual) profits.
• Stockholder/Shareholder - an individual or institution that owns stock or shares in a corporation, by
definition a type of stakeholder.
• Milton Friedman - a Nobel Prize-winning economist, asserted in a well-known 1970 New York Times
Magazine article that the sole "social responsibility of a business is to increase its profits."
• Social contract - an implicit agreement among societal members to cooperate for social benefit; when
applied specifically to a business, it suggests a company that responsibly gives back to the society that
permits it to incorporate, benefiting the community at the same time that it enriches itself.
• Long-term perspective - a broad view of profit maximization that recognizes the fact that the impact of
a business decision may not manifest for a long time.
• Goodwill - the value of a business beyond its tangible assets, usually including its reputation, the value
of its brand, the attitude of its workforce, and customer relations.
• Corporate culture - the shared beliefs, values, and behaviors that create the organizational context
within which employees and managers interact.
 GE9 (7504) – ETHICS 1ST EXAM REVIEWER

• Corporate social responsibility (CSR) - the practice in which a business views itself within a broader
context, as a member of society with certain implicit social obligations and responsibility for its own
effects on environmental and social well-being.
1.3 Multiple versus Single Ethical Standards

• Ethical relativism - a philosophy according to which there is no right or wrong and what is ethical
depends solely on the context.
• Multiple ethical standards - involve considering various ethical principles, values, and stakeholder
interests when making decisions.
• Single ethical standards - entail adhering to a singular set of ethical principles.
• Normative ethics - is about discovering right and delineating it from wrong; it is a way to develop the
rules and norms we use to guide meaningful decision-making.
2.1 The Concept of Ethical Business in Ancient Athens

• Ancient Athens - profoundly influenced Western civilization through its contributions to the arts,
literature, and government, shaping Western consciousness.
• Athens in the fifth century BCE attracted people seeking a better life, offering opportunities in trade,
commerce, and intellectual pursuits.
• Virtue ethics - an ethical system based on the exercise of certain virtues (loyalty, honor, courage)
emphasizing the formation of character.
• Alfred North Whitehead - British mathematician and philosopher, famously remarked, "the safest
general characterization of the European philosophical tradition is that it consists of a series of
footnotes to Plato."
• Nicomachean Ethics - authored by the ancient Greek philosopher Aristotle, comprises his lecture
notes to his students regarding virtuous living and the pursuit of happiness.
- It stands as the oldest surviving work on ethics in Western philosophy.
• Teleology - from the Greek telos meaning goal or aim, is the study of ends and the means directed
toward those ends.
• Eudaimonia - the happiness or human flourishing that results from virtuous activity; it is more than
contentment or satisfaction.
• Aristotle identified two types of virtues:
1. Intellectual virtues - including knowledge(epistḗmē), wisdom (sophíā), and, most importantly
for Aristotle, prudence (phrónēsis), or practical wisdom—served as guides to behavior; that is, a
person acted prudently based on the wisdom gained over time through the ongoing acquisition
and testing of knowledge.
2. Moral virtues
• Golden mean - in Aristotelian virtue ethics, the aim of ethical behavior, a value between excess and
deficiency.
• Prudence - has been translated as “common sense” and “practical wisdom” and helps individuals make
the right decision in the right way at the right time for the right reason.
• Liberal - referred not to a political or economic stance but rather to an aspect of personality.
2.2 Ethical Advice for Nobles and Civil Servants in Ancient China

• Kung Fu Tzu or Master Kung - teachings and writings of Confucius that have endured for over two
and a half millennia and have deeply influenced Chinese culture.
• Confucianism - virtue is central to governance, emphasizing the importance of relationships.
• Confucian virtue differs from Aristotelian virtue as Confucian virtue emphasizes the dynamics of
relationships rather than individual excellence.
• Li - the proper order of the universe and the customs and rituals that support order and harmony on
Earth.
• Junzi - a person who is gracious, magnanimous, and cultured; a flourishing human being.
• Dao of humanity or the Way - which aimed to address rampant lawlessness by emphasizing humanity
as the solution.
 GE9 (7504) – ETHICS 1ST EXAM REVIEWER

• Confucius believed in the inherent goodness of people and sought to improve human behavior to
counteract inhumanity. He identified three means to achieve this:
1. whole-hearted sincerity and truthfulness - emphasized loyalty to truth rather than blind
loyalty, encouraging subjects to offer honest advice to rulers even if it contradicted their
preferences.
2. constant mean - advocates for balance between excess and deficiency, promoting moderation
and avoiding extremes of thought and action through ritual acts.
3. expediency (quan) - a practical consideration of the relative rightness of options when
considering a moral dilemma.
2.3 Comparing the Virtue Ethics of East and West

• Managerial ethics - a way of relating to self, employees, and the organization that balances individual
and collective responsibility.
2.4 Utilitarianism: The Greatest Good for the Greatest Number

• Utility function - a measure, in “utils,” of the value of a good, service, or proposed action relative to the
utilitarian principle of the greater good, that is, increasing happiness or decreasing pain.
• Consequentialism - an ethical theory in which actions are judged solely by their consequences without
regard to character, motivation, or absolute principles of good and evil and separate from their capacity
to produce happiness and pleasure.
• Harm principle - the idea that the only purpose for which the power of the state can rightly be used is
to prevent harm to others.
• John Stuart Mill – emphasized the importance of free speech for correcting error and creating value for
the individual and society.

2.5 Deontology: Ethics as Duty

• Immanuel Kant - diverged from Bentham and Mill by prioritizing motives over consequences in ethical
considerations. He emphasized the willingness to act for the good of others, regardless of personal
loss, valuing the right reasons for actions over specific outcomes. He published “Critique of Pure
Reason”.
• Dogmatism – the unquestioned acceptance of rationalism.
• Categorical imperative - Kant’s unconditional precept that we must “act only according to that maxim
whereby you can, at the same time, will that it should become a universal law”; to act on the basis of
good will rather than purely self-interested motives and never treat others as means toward an end
without consideration of them as ends in themselves.
2.6 A Theory of Justice

• John Rawls - sought not to maximize wealth, which was a utilitarian goal, but to establish justice as the
criterion by which goods and services were distributed among the populace.
• Justice as fairness - Rawls’s summary of the essence of his theory of justice.
• Justice theory - the idea of fairness applied beyond the individual to include the community as well as
analysis of social injustice with remedies to correct it.
• Social contract theory - a theory that holds the natural state of human beings is freedom, but that
human beings will rationally submit to some restrictions on their freedom to secure their mutual safety
and benefit.
• Rawls’s justice theory contains three principles:
original position - a hypothetical situation in which rational people can arrive at a contractual agreement
about how resources are to be distributed in accordance with the principles of justice as fairness.
veil of ignorance - a condition in which people arrive at the original position imagining they have no
identity regarding age, sex, ethnicity, education, income, physical attractiveness, or other characteristics; in
this way, they reduce their bias and self-interest.
unanimity of acceptance of the original position - the requirement that all agree to the contract before it
goes into effect.